Seeking relief from an overwhelming compliance workload, a large, regulated firm in the Benelux region pursued a solution to streamline its legal and compliance processes. This case study explores the implementation of a bespoke managed service model aimed at fully outsourcing the compliance process, addressing the challenges faced by the overburdened Legal Department.
Context
The company's internal legal department grappled with managing inbound Know Your Customer (KYC) requests, from banks and investors. These inbound requests included filling in countless forms and sharing information on the company’s Ultimate Beneficial Owners (UBO’s). The legal department also conducted thorough outbound KYC reviews. This involved reaching out to investors and screening their UBOs against international sanctions lists along with reviewing the company information to ensure regulatory compliance. In 2023, the strain on the legal team was palpable as they struggled to balance these dual responsibilities alongside their legal duties.
Challenge
The primary challenge for the Legal Department was the simultaneous management of two KYC processes, which risked overwhelming resources and jeopardizing compliance obligations.
Solution: A Fully Outsourced Managed Service
To meet this challenge head-on, the firm embraced a fully outsourced managed service model. This strategic move involved partnering with Legadex, a specialized external provider to oversee the end-to-end compliance process, from initial customer due diligence to ongoing monitoring and review.
Implementation
The implementation phase of the managed service model unfolded through meticulous steps:
1. Assessment and Planning: A comprehensive evaluation of the company's existing compliance processes identified areas for enhancement and customization.
2. Technology Selection: Rigorous scrutiny led to the selection of legal tech solutions meeting stringent standards to support the company's compliance needs. A selection of screening software was shown including, Refinitiv, Reglab and WorldCheck.
3. Customization and Integration: Collaborative efforts between the chosen provider and the legal department ensured the tailoring and seamless integration of the compliance solution into existing workflows and systems.
Results
The implementation of the fully outsourced managed service model yielded tangible benefits:
- Efficiency Gains: By entrusting compliance tasks to a specialized provider, the Legal Department redirected its focus to core legal responsibilities, resulting in heightened productivity and efficiency.
- Audit Proofing: Legadex's managed service model ensures robust compliance documentation, bolstering audit readiness. With meticulous adherence to best practices, the company demonstrates proactive compliance, instilling confidence and mitigating risks during audits.
- Compliance Assurance: Leveraging the expertise and resources of the external provider strengthened the company's compliance capabilities, ensuring strict adherence to regulatory requirements and mitigating the risk of non-compliance.
- Cost Savings: Embracing the outsourced model delivered a cost-effective solution compared to maintaining an in-house compliance infrastructure, with savings realized through reduced staffing and operational expenses.
Conclusion
In conclusion, the adoption of a bespoke managed service model emerged as a strategic obligation for the financially regulated firm's overstretched Legal Department. By outsourcing the compliance process to a specialized provider, the company alleviated the burden on internal resources, enhanced compliance effectiveness, and achieved substantial cost savings. This case study underscores the value of tailored outsourcing solutions in navigating complex regulatory landscapes within highly regulated industries.